Crude oil climbed back to around $91 a barrel on Friday, reversing earlier losses as markets balanced the risk of renewed US–Iran military tensions against the possibility of a diplomatic breakthrough. Investors are now considering whether the conclusion of the US midterm elections could clear the way for fresh action against Iran, potentially jeopardizing oil supplies from the Middle East.
The geopolitical backdrop remains tense. Iran reported attacks on oil tankers in the Strait of Hormuz on Thursday, while data from the UKMTO indicated that incidents involving vessels are continuing at close to record levels. At the same time, there were tentative signs of progress on the diplomatic front, with reports that Iran has sent a new nuclear proposal to Washington via Qatar.
However, major obstacles persist regarding Iran’s nuclear programme. Washington is insisting that Tehran relinquish its nuclear capabilities, while Iran is demanding the lifting of the US naval blockade, sanctions relief and the unfreezing of assets as conditions for fully reopening the Strait of Hormuz. Despite Friday’s rebound, crude oil prices were still down nearly 12% for the week.
